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The Latest Generation Of 20 Year Olds Increasingly Renting…Everything

The day Michael Anselmo signed a lease on his first apartment in New York City, he lost his job at Buck Consultants LLC. He spent about 10 months struggling to pay rent with unemployment benefits. Two years later he’s still hesitant to buy a home or even a road bike.

“Every decision that I have made since I lost my job has been colored by that insecurity I feel about the future,” said Anselmo, 28, who now rents an apartment in Austin, Texas, and works as a consultant for UnitedHealth Group Inc. “Buying a house is just further out on the timeline for me than it used to be.”

Anselmo and many of his peers are wary about making large purchases after entering adulthood in the deepest recession and weakest recovery since World War II. Confronting a jobless rate above 8 percent since 2009 and student-loan debt hitting about $1 trillion, 20-to-34-year-olds are renting apartments, cars and even clothing to save money and stay flexible.

As the Great Depression shaped the attitudes of a generation from 1929 until the early years of World War II, so have the financial crisis and its aftermath affected the outlook of young consumers like Anselmo, said Cliff Zukin, a professor of public policy and political science at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, the state university of New Jersey.

Recession Effects
“This is a generation that is scared of commitment, wants to be light on their feet and needs to adjust to whatever happens,” said Zukin, who’s researched the effects of the recession on recent college graduates. “What once was seen as a solid investment, like a house or a car, is now seen as a ball and chain with a lot of risk to it.”

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The EU Reported a 0.6% Decline in Comparable Sales for July While Asia Experienced a 1.5% Drop

“Europe reported a 0.6% decline in comparable sales for July as strong results in the U.K. and Russia were more than offset by weaker performance in Germany and several Southern European markets amidst an increasingly difficult environment. Europe’s priority remains building guest traffic by featuring enhanced everyday value offerings alongside classic core favorites and appealing premium products.

Asia/Pacific, Middle East and Africa reported a comparable sales decrease of 1.5% for July. Positive results in Australia were more than offset by ongoing weakness in Japan and the negative impact from the shift in timing of Ramadan. Throughout the segment, compelling daypart value platforms and market-leading conveniences continue to differentiate McDonald’s in the region. ”


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BoF Predicts Falling Into Recession in Q3

“PARIS (Reuters) – France’s economy is likely to slip into recession in the third quarter, the Bank of France said on Wednesday, forecasting a contraction of 0.1 percent for the second quarter running which adds to signs Europe’s economic prospects are still worsening.

The estimate, which followed the Bank’s forecast last month for a similar contraction in the second quarter, suggests France’s 2 trillion euro economy may struggle to meet the government’s forecast for 0.3 percent growth this year.”

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BoE Comments on Falling Deeper Into Recession, No Hints of Further Stimulus

“LONDON (Reuters) – Britain’s economy will barely grow this year and may have taken a bigger hit from the euro zone debt crisis than thought, the Bank of England said on Wednesday, but it gave little indication that it would rush to pour further stimulus into the economy.

The BoE resumed its asset buying last month, launching a four-month, 50-billion-pound ($78 billion) program with newly created money to keep a lid on borrowing costs and pump more cash into the economy.

Since then, figures have shown Britain’s recession has deepened, with little sign of a hoped-for bounce in activity in July or a boost from the Olympic Games the country is hosting.”

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Update: What The Largest Companies are Saying About the Global Economy

“Earnings season is heading into the final quarter, as more than 85 percent of S&P 500 companies have already reported results.

Rather than dwell on company-specific performance, we wanted to see what these industry leaders were saying about the global economy.”

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Italy Economy Shrinks For A Fourth Quarter As Slump Deepens

Italy’s economy contracted for a fourth straight quarter in the three months through June as manufacturing slumped and the euro-area debt crisis intensified.

Gross domestic product declined 0.7 percent in the second quarter, Rome-based national statistics institute Istat said in a preliminary report today. The contraction was less than the median forecast for a 0.8 percent decline in a survey of 22 economists by Bloomberg News. GDP fell 2.5 percent from a year earlier, the most since the final quarter of 2009.”

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German Factory Orders Fall Twice As Much As Forecast

“German factory orders declined more than twice as much as economists forecast in June as sales to euro-area countries slumped.

Orders, adjusted for seasonal swings and inflation, dropped 1.7 percent from May, when they rose 0.7 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.8 percent decline, according to the median of 35 estimates in a Bloomberg News survey. From a year earlier, orders fell 7.8 percent when adjusted for work days.”

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Profits are Plunging in China

“Chinese companies are warning they will be reporting either losses or declining profits for the first half.  Corporate results are forcing stock markets down and pointing to a contraction in the country’s economy.

China Rongsheng Heavy Industries, China’s largest private shipbuilder, lost 19% of its value when it issued a profit warning at the end of last month.  Yards in the country are in a terrible state—the industry’s orders for new vessels in May were half of what they were a year earlier—yet Rongsheng’s poor prospects had largely been discounted.  The company’s shares tumbled not only because it hadn’t announced any shipbuilding orders this year but also because the U.S. Securities and Exchange Commission implicated Zhang Zhirong, its chairman and founder, in an insider trading scheme relating to the acquisition of Canada’s Nexen by CNOOC, a unit of one of China’s state oil giants.

We can perhaps dismiss Rongsheng as an aberration, but poor results at other companies are indicative of the state of the country’s increasingly troubled

economy. ”

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El-Erian: World in ‘Serious, Synchronized Slowdown’

“Pacific Investment Management Co.’s Mohamed El-Erian called recent declines in purchasing manager indexes in Europe and Asia “frightening” and said the world economy is suffering its severest slowdown since the global recession ended in 2009.

El-Erian, who is chief executive officer of the Newport Beach, California-based Pimco, predicted global growth of 2.25 percent over the next 12 months. That’s down from the 3.9 percent in 2011 and 5.3 percent in 2010 recorded by the International Monetary Fund. The world economy contracted 0.6 percent in 2009.

“This is a serious, synchronized slowdown,” El-Erian said in an interview Thursday.”

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The New Normal Consumer ?

The consumer has been counted as dying for the last 25+ years, but it never happened. Now we are truly seeing fundamental shifts in consumer behavior. We must ask what will it do to GDP going forward ?

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South Florida No. 2 in the Housing Rebound

via miamiherald.com 

The latest Case-Shiller numbers show South Florida trailing Phoenix in rising home values. Having two of the country’s worst housing bubbles helps make the recovery look stronger.


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South Florida enjoys the country’s second-best housing rebound this year.

That’s one result from the Economic Time Machine’s ranking of the latest figures from Case-Shiller, the top yardstick for the country’s housing crisis. Since January, South Florida’s Case-Shiller real estate index increased 5 percent. Only Phoenix had a better showing, with a 10 percent gain over five months. (The ETM used a two-month average to wash out monthly quirks in the Case-Shiller numbers.)

Change from a year ago Change from January Change from peak Change from May 2002
Phoenix 10% 10% -51% -2%
Los Angeles -3% 2% -39% 30%
San Diego -1% 2% -39% 12%
San Francisco 0% 4% -39% 0%
Denver 3% 3% -8% 4%
Washington, DC 2% 4% -27% 40%
South Florida 3% 5% -48% 12%
Tampa 2% 4% -45% 5%
Atlanta -16% -1% -36% -23%
Chicago -4% 0% -36% -9%
Boston 0% 1% -16% 11%
Detroit 2% -2% -46% -39%
Minneapolis 4% 4% -33% -10%
Charlotte 1% 2% -16% 6%
Las Vegas -5% 3% -61% -20%
New York -3% 0% -25% 25%
Cleveland -1% 1% -20% -9%
Portland, Ore 0% 2% -27% 21%
Dallas 3% 3% -6% 4%
Seattle 0% 3% -29% 20%
Average metro area -1% 2% -33% 11%
Change from a year ago Change from January Change from peak Change from May 2002

The ETM analysis also compared the May reading to peak levels for all 20 metropolitan areas that Case-Shiller tracks. The gap from the top of the market to now helps explain South Florida’s current rebound.

According to Case-Shiller, South Florida’s housing bubble continues to be one of the worst in the country. Values are off 48 percent in South Florida from peak levels set in 2006. That’s only slightly worse than Phoenix’s 51-percent drop, but considerably better than the ultimate bubble: Las Vegas, where values are down 61 percent.

Read more here: http://www.miamiherald.com/2012/08/01/2925090_south-florida-no-2-in-the-housing.html#storylink=addthis#storylink=cpy

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China’s Manufacturing Slows to Just Above Recessionary Territory

China’s manufacturing teetered on the edge of contraction in July and South Korea’s exports and inflation declined, indicating that stimulus efforts have yet to bear fruit.

The Purchasing Managers’ Index in China unexpectedly fell to 50.1 in July, the weakest in eight months, from 50.2 in June, a government report showed today. Fifty marks the dividing line between expansion and contraction. South Korea’s exports slid by more than double the amount forecast by analysts and inflation moderated to a 12-year low.”

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We’re In Milton Friedman’s World

Celebrating what would be Friedman’s 100th birthday, a Forbes contributor discusses some of Friedman’s most important contributions, many of which are no longer controversial and have instead become conventional wisdom.

Read the article here.


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More Investors Eyeing Wine, Art Funds for Hedging

via NYPOST.com

Don’t like how stocks and bonds are performing? Here’s an asset you can wrap your arms around — literally.

Rising fears that traditional investing has become a lose-lose proposition have a growing number of wealthy folks seeing dollar signs in niche funds that invest in art, wine, musical instruments and even classic cars.

They’re known as “collectible” funds or “treasure” funds, and while they come with plenty of skeptics and potential pitfalls, they’re also promising returns reminiscent of the days before the Great Recession.

Sergio Esposito, founder of Union Square’s wine shop Italian Wine Merchants, said the wine fund he helped start in 2010, The Bottled Asset Fund, has been doing so well he hopes to launch another next year.

ART OF THE DEAL: Sergio Esposito, in his Manahattan office, is seeing sparkling returns on his $8.2 million Bottled Asset Fund. Other funds invest in fine art and rare antique cars.

ART OF THE DEAL: Sergio Esposito, in his Manahattan office, is seeing sparkling returns on his $8.2 million Bottled Asset Fund. Other funds invest in fine art and rare antique cars.

After selling its first batches of wine this year, the $8.2 million fund is now seeing profits upward of 30 percent, he said.

Try getting that out of the S&P 500 or even smart-money hedge funds.

It’s not just wine funds that are promising mouthwatering returns.
Read more: http://www.nypost.com/p/news/business/vintage_returns_M3VjPkRiMdc8S0BY37Wp7I#ixzz221u2xpDs

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